The structure of organizational advancement: career ladders in internal labor markets

Strategy & Business Policy

Speaker: Gianluca Carnabuci

Professor - ESMT Berlin

Conference  Jouy-en-Josas / room meeting S211

Abstract:

Although organizations devote substantial effort to designing differentiated career paths and promotion systems, empirical research on internal labor markets typically models firms as operating a single advancement structure. Departing from this approach, we develop a meso-level framework that treats the career ladder, defined as the chain of jobs linked by observed worker transitions within an organization, as a core feature of internal labor markets. Using linked employer-employee data, we reconstruct career ladders for a large sample of German establishments. We show that most organizations operate multiple, structurally decoupled ladders with distinct wage-authority profiles, which we organize into four opportunity regimes: strategic, support, expert, and supervisory ladders. We illustrate the framework’s analytical leverage in three applications, each revealing insights obscured by a single-ladder assumption. First, organizations with multiple ladders exhibit higher labor productivity, which increases with the relative size of strategic ladders. Second, gender inequality in pay and authority partly reflects gendered sorting into disadvantaged ladders, persisting net of standard explanations. Third, ladder type shapes outsourcing decisions, with expert ladders most likely to be externalized. Foregrounding ladders as a meso-level unit of analysis, we offer a general framework for examining how organizations structure advancement opportunities, reproduce inequality, and define organizational boundaries.